Kerui's Li Jinxu: Our Toughest Competitor Is Us

Kerui's manufacturing business unit in China encompasses six factories including the plant for manufacturing and assembly of drilling rigs in Dongying, the Shandong province

Kerui's manufacturing business unit in China encompasses six factories including the plant for manufacturing and assembly of drilling rigs in Dongying, the Shandong province

By Bojan Soc, July 27, 2015

As one of petroleum industry veterans put it, this year’s MIOGE was a “genuine display” of the best achievements in machine-building that serves the national oil and gas sector. And we’re talking about achievements that aren’t confined to Russian borders only – this time around at the Moscow forum a number of Chinese oilfield equipment manufacturers have told their success stories as well. One of the most conspicuous exhibitors was Kerui, the recognized leader among Chinese equipment producers, which is also an important player in the oilfield services market. In his interview with OGE, Li Jinxu, the head of Kerui’s Russian rep office in Moscow, announced the firm’s plans to build a plant in Russia, stressed the advantages a private Chinese company has over its state-controlled competitors and suggested to potential buyers of Kerui equipment to raise loans in China.
 
OGE: How is your business doing in Russia, what kind of demand is there for Kerui products? What can you say about development plans and the choice of direction?

Li Jinxu: So far, we have delivered 10 drilling rigs to Russia, including fixed drilling train rigs fit for operation in the Arctic, as well as mobile drilling rigs. In regard to business development I can say that due to the sanctions we had to slightly correct our business plan for 2015 (it was put together last year), but it hasn’t changed substantially and we’re still capable of meeting these targets.

OGE: Kerui is not a novice in Russia’s oil and gas market, your company had been working here way before the recent rapprochement between Russia and China in the energy sector, hadn’t it?

Li Jinxu: Yes, we have been working here for years, I’m the third head of our representation office in Russia. Back in 2011 we delivered our first drilling rig to a Russian customer.

OGE: Кerui is a privately-owned business. Does that make life more difficult for your company considering that the Chinese government provides heavy support to state-owned companies?

Li Jinxu: Indeed, we are a private company, but we have our own trump cards compared to state firms. In private companies all issues are solved pretty quickly, procedures don’t take long. If there’s a serious issue on the agenda, I can even phone our owner in order to speed up the process of obtaining approvals at different levels of our corporate hierarchy. The quickness of decision-making and minimal bureaucratization of the business process are our clear advantages over state-owned firms. Regarding government support, China is currently implementing the "One Belt, One Road" government program and we – being a very big private company – are also receiving government support.

OGE: Baoji and Honghua firms account for approximately 90 percent of China’s oil and gas equipment deliveries to Russia. Can Kerui compete with these firms?

Li Jinxu: The companies you just mentioned have been present in the Russian market for a long time, they entered it earlier than we did, and compared to them Kerui’s share is